MANAMA: In Bahrain, the assets management industry has been continuing to show strong growth during the past five years. As of the end of the first quarter of 2018, the total assets under management of Investment firms reached US$20.1 billion, with an average growth of 16% per annum recorded over the past five years, according to a senior official at the Central Bank of Bahrain (CBB).
“This growth in assets is mainly due to the entrance of new investment firm licensees to the market and the introduction of new innovative products and structures by existing firms,” Abdul Rahman Al Baker, Executive Director of Financial Institutions Supervision at the Central Bank of Bahrain, in his keynote address at the 3rd Middle East Assets Management Forum held in Bahrain, said.
“Since the introduction of the Investment Business license by the CBB under Volume 4 Rulebook in 2006, the number of investment business licensees has risen to 52 as of the date. This clearly indicates that the number of the investment business licensees grew from 22 firms in 2006 to 52 as of the end of April 2018.
“The three categories of investment license permit firms to undertake any or full range of assets management activities depending on their category and line of business, such as investing as principal, asset management, operating a collective investment undertaking, acting as custodian of financial instruments, or offering brokerage and advisory services on financial instruments to clients.
“The mutual funds sector is another fastest growing segments of assets management industry. With approximately US$ 7.4 billion in assets under management, through more than 2,300 funds, the industry has been growing at steady base in recent years. Overall, there are 89 Islamic funds that are incorporated and registered in Bahrain with total assets amounting to US$1.43 billion as of March 2018,” he said.
The CBB, through its enabling legislation, promotes the development of new products for investors in both conventional and Islamic financial markets, while at the same time providing credible regulation in both areas.
The existing regulatory framework for Collective Investment Undertakings (CIUs) has provide for a full range of investment funds catering to various types of investors, from retail to high net worth individuals and institutional investors. In order to further enhance the existing CIUs framework, the CBB has issued Volume 7 Rulebook which provides a comprehensive rules and regulations pertaining to the authorization and supervision of CIUs domiciled or offered in Bahrain. The regulation has recognized the importance of expanding key areas such as the corporate governance, as well as the role and responsibilities of each relevant party of a scheme. It also expands the variety of funds that can be established in Bahrain, by introducing rules governing Real Estate Investment Trusts (REITs), Private Investment Undertakings (PIUs) and Exchange-Traded Funds (ETFs). In keeping with Bahrain’s leadership in Islamic finance, the CIU rules also provide a solid foundation for the establishment and management of mutual funds that comply with Sharia principles.
Furthermore, the Offering of Securities (OFS) Module under Volume 6 Rulebook contains detailed rules and regulation that covers the issuing, offering, floating and subscribing to different types and classes of securities, including Sharia compliant securities like Sukuk offered to the public or through private placement in or from Bahrain. The Module also provides the procedures and documentation that need to be submitted by the issuer for various types of securities that will be offered publicly or privately, as a part of their application to obtain the CBB approval in this regard.
Generally, the potential size of asset management sector is vast, and the accelerated establishment of the sector hinges on attracting the flow of potential funds into asset management industry. However, it is important to ensure that asset management industry has solid and strong foundations for future development and growth.
